Given the choice between a guaranteed $500,000 in cash and a 50-50 chance at a cool million, most of us take the safe bet—better to have half a mil in the bank than to risk walking away with nothing. That phenomenon is called risk aversion, and it could be an evolutionary consequence of our ancestors' preference for relatively small tribal groups, researchers argue in a new study.
The study of risk aversion has a long history, dating back at least to the work of 18th-century mathematician Daniel Bernoulli. The idea is simple enough: We value gambles somewhat less than their face value. For example, we value a one-in-a-million chance at $1 million somewhat less than the face value of one dollar—that's why many of us won't buy lottery tickets.
Still, the wealth of research on risk aversion makes one omission in that work a bit surprising, says Randy Olson, a graduate student at Michigan State University and an author of the new paper. When he and co-authors Arend Hintze and Ralph Hertwig got to talking, they realized that despite all the research that's been done, "we really have no clue how humans came to be risk averse in the first place," Olson writes in an email.
There's a simple evolutionary tradeoff: Less risk averse people are more likely to make life-or-death gambles, but if they survive, they are more likely to have children to carry on the risk-taking tradition.
One possibility is that humans evolved a genetic tendency toward risk aversion through natural selection, a hypothesis that the authors explored through computer simulations. In their model, individuals in one generation have different levels of risk aversion, which they inherit from their parents and pass on to their children. There's also a simple evolutionary tradeoff: Less risk averse people are more likely to make life-or-death gambles, but if they survive, they are more likely to have children to carry on the risk-taking tradition. Crucially, the researchers set up that tradeoff in perfect balance, so that the average likelihood of reproducing was independent of individuals' attitudes toward risk.
At first glance, the experiment suggests that evolution wouldn't favor one degree of risk aversion over another, but the computer simulations show that's only true in certain cases—namely, when population size is large. When the simulated population is small, or when a large population comprises small groups of fairly isolated people, natural selection produces more risk-averse individuals. Those findings align with the observation that ancient humans tended to band together in groups of roughly 150, the researchers note, suggesting that our aversion to gambles could be an evolutionary consequence of our ancestors' social conditions.
Still, genetics is just one possibility, and it can't be the only factor, since research shows risk aversion can change with experience, the team explains. "Thus, while this work has studied the impact that evolutionary history can have on strategy choice," they write, "it should be seen only as an element in understanding why humans shy away from risk."